Branch Manager? Or Corporate Cop ?

Remember when good branch managers reminded you of your dad? Whether man or woman, they'd push you hard to succeed, dress you down when you deserved it, take the time to listen--and always be there. Just like dad. Their advice was wise because they'd put down deep roots in the community and knew everyone you ought to know. You never doubted they were on your side.How many brokers can say that about

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Remember when good branch managers reminded you of your dad? Whether man or woman, they'd push you hard to succeed, dress you down when you deserved it, take the time to listen--and always be there. Just like dad. Their advice was wise because they'd put down deep roots in the community and knew everyone you ought to know. You never doubted they were on your side.

How many brokers can say that about their manager today? You hear complaints that branch managers have become corporate. They're too busy crunching profitability numbers to give good sales ideas. They push the firm's agenda without getting to know how their brokers best do business. They're always looking over the broker's shoulder for compliance problems. And they don't stay around very long.

Talk to branch managers who have weathered the past 10 years about what's happened to their jobs. You hear frustration. They report a dramatic increase in complexity--and much more corporate involvement in their daily decisions.

You also hear fear. "In the last five years, branch managers have had more liability than ever before, not just regulatory, but employment," says Chuck Van Gronigen, A.G. Edwards training director. Adds Robert Wincowski, who recently left branch management to become national sales manager for First Albany: "Branch managers are now in the forefront of every legal problem. I'm constantly worrying about clients now."

Richard Miller, a producing branch manager for A.G. Edwards in Ft. Wayne, Ind., says when he walks up to a broker's desk these days, it's no longer clear what his role is. "Brokers just don't know what hat I'm wearing," Miller says. "Am I there to talk about production, compliance or sales ideas?" After 14 years in management, it's "incredible" how much time now is "sucked up" by compliance, he says. To cope, Miller designated one of his brokers as sales manager and split his bonus with him. The broker now takes on the role of inspiring the troops.

"I still can't get it all done," says Miller. True, his own production was up 40% last year, "but I did nothing to make it do that," he admits.

Technology Pressure At EVEREN Securities, branch managers have been telling Brand Meyer, the firm's eastern regional director, that the firm is "completely changing" what it asks of them, he says. The biggest change, says Meyer, is a new focus on what he calls "proactive account supervision." That means branch managers must routinely contact their brokers' clients and demonstrate to the firm that all is well.

"In the past, managers left it up to brokers and the trust they have in the brokers," says Meyer. Many managers don't like the change. "They say they're forced to reorganize their time or just go back to full-time production."

Reflecting on his recent move from branch management, Wincowski says he felt he'd become a compliance officer. "I'd sign my name more times in a month than my branch manager did in his entire career," he says.

Technology is the main culprit in the ballooning administrative burden managers feel. While firms have automated many operations and compliance functions, technology also has given managers more to do. Miller recalls being able to review the blotter and correspondence well before noon, leaving the rest of the day for coaching brokers and his own production.

"Now I key up account review and I'm asked to do quarterly reports from different areas of compliance," Miller says. Some of the reports, he says, are "outdated" and inefficient. "The firm could make things more effective if I could have a preformatted account review letter I could send out to clients, but they won't do that."

Miller says he also has had to use his own system to document his notes about each broker's business. The firm's system won't allow him to add his own explanations about broker trades that are flagged for review. "That leaves me defenseless should a regulator come in two years later asking questions," says Miller.

Managers also say they have their hands full overseeing brokers' contact-management systems. "It used to be Bill Good's was the only sophisticated system," says Wincowski. "Now the whole world is a Bill Good-type system, which has forced us to be involved in managing broker use of technology."

Technology also makes it harder just to get an idea across to brokers, Wincowski notes. "You used to be able to hold a meeting or get on the squawk box and get your idea across in one shot," he says. Now you have to do E-mail, fax, squawk box and still hold a meeting to make sure you reach brokers.

Technology has had more subtle effects on the manager's role, too. It's reduced personal interaction, the trade-off of ideas, says Lee Crawford, a 13-year branch manager for Wheat First (now Wheat First Union) in Hagerstown, Md.

"Now I'm in my office a lot with the door closed in front of a screen," he says. "I could go for several days without needing to talk to anyone." Brokers used to talk with him and each other about what would be best for a client's situation, Crawford says. Now they just run an asset allocation program, which can't take into account subjective elements. "Technology has made it easy to just run a bunch of printouts and pie charts, and head out the door," he says.

Now a Business Consultant Gone are the days when a branch manager's main skill was knowing how to sell products better than anyone in the branch. They came up with incentives and ran a campaign. Wincowski remembers what it was like for his branch manager:

"He'd have a promotion for a government fund. There'd be big-screen televisions stacked up on the floor. He'd be walking around with a cigar and hand one out to everyone at the end of the day."

The shift from transaction to fee business has changed everything, says Tom Philips, a Merrill Lynch branch manager and 17-year management veteran in York, Pa. "We don't have sales meetings now that focus on specific ideas," he says. "My job as a sales leader now is to focus on what we need to do to best position our clients in the economic environment."

That means managers must re-educate themselves. "Until about 1985, my focus was to just come up with a product idea," says Philips. "Now I need to stay current on annuitized products, mutual fund wrap programs and managed money programs. In generating revenue, now I need to ask, 'What kind of methodology should the FC use?'"

The business has become so commoditized that a branch manager must be a lot more creative in identifying and shaping a broker's unique marketing talents, says David Zimmerman, a Dain Rauscher branch manager in Dallas and 16-year management veteran.

"You're managing businesses, not salespeople," he says. "The branch manager has become a business consultant to an entrepreneur who may also be a manager of a team."

Branch manager compensation no longer leaves managers free to build branch revenues as they see fit. Instead of a bonus based solely on a straight percentage of branch revenues, firms are tying at least a part of compensation to meeting quantifiable goals that reflect the firm's marketing philosophy. The changes leave brokers uncertain of where a manager's loyalty lies.

Prudential Securities, for example, now ties half of its branch manager compensation to meeting "very specific business objectives," all focused on "specific broker activities," says Suzanne Sack, director of Prudential Securities University. "We need more FAs to deliver on the promise of providing financial advice on a planning platform," she says.

Last year, Smith Barney put in a plan to tie about 10% of branch manager bonuses to meeting certain objectives in hiring a sufficient number of women and minority brokers and staffers.

At EVEREN, Meyer says that bonuses have been "redirected to meeting specific objectives," and now are "a little more subjective."

Recruiting Headaches It's no surprise managers say recruiting has become very tough. Few have the time to build a network in their brokerage community like managers used to do. Few stay in the job at the same branch long enough to develop a reputation to attract brokers. Branch managers blame golden handcuffs and proprietary products for brokers being unwilling to move. They also say it's harder to find good brokers.

"We used to look for strong sales backgrounds," says Philips. "Now I'm looking for a more intelligent broker, for a broker with strong interpersonal skills."

Firms are relying more on trainees, which makes it tough. "My regional manager told me that 10 years ago a new broker would gross $50,000 to $60,000 the first year and now it's $60,000 to maybe $65,000," says Miller. "It hasn't changed much over that much time. How can a 30-year-old with a family stay in there the three years it takes to make decent money?"

Crawford says he worries about newer brokers' survival instincts. "Many of them haven't seen tough times and so haven't developed the character traits to get through them," he say. "You have to deal with their version of a bad day, and the threshold just isn't that high."

"We used to have to fight for business because of bear markets in between the bull markets," the former manager says. "The big focus now on compliance may be a luxury because of good markets. In a long bear market, branch managers may have to go back to putting all their energy into building business."

If brokers think the branch manager's role has changed, they need look no further than their firms' training directors for evidence.

Here's what Sack is getting at: Time was, she says, branch managers mainly aimed to please their brokers, the big producers receiving the lion's share of attention.

"The mentality was 'the broker pays the bills,'" says Sack. "Now it's 'the client pays the bills.'" That means the big focus is on branch operations, says Sack, particularly managing profitability by encouraging fee-based business. "Close to 50% of our clients prefer to pay fees," says Sacks. "The branch is less susceptible to market downturns, so now managers can stop looking at the market and look at client needs."

Creating "equilibrium" also appears to mean making sure all Prudential Securities brokers follow through on corporate orders to structure their business a certain way. "Our branch managers have to go from being great caretakers of client assets to being able to market a financial planning platform," says Sack. "They must be more active telling our story. They must make sure every FA can deliver on our promise to provide advice on a financial planning platform."

Branch managers are expected to be more involved with clients, too, Sack says. For example: Instead of doing a national client satisfaction survey from corporate headquarters, the firm recently gave all branch managers a survey and asked them to personally talk to their brokers' clients, then report back.

While Prudential Securities has for many years chosen branch managers according to a formal list of requirements, it recently brought all branch manager selection and training in-house to better control the process.

"Ten years ago, we used to choose [as branch manager] the most successful broker in a branch as a reward," he says. Now the firm needs "a more complete package," he says. "You can no longer have a caretaker manager who happens to have the keys to the office and signs off on a blotter. You need someone with recruiting, training and supervision skills."

The firm is preparing to debut a new training program for managers who have survived the "honeymoon" and want to work better with brokers, says Van Gronigen. "We have a greater emphasis now on coaching and developing brokers because it's really expensive to bring on a trainee."

Branch managers have more time for brokers, Van Gronigen believes, because in the past two years, the firm has automated some key supervisory functions. They now can quickly analyze their sources of revenue and do hypotheticals in profitability planning. Another program, in place six months, eliminates manually examining brokers' trade runs.

Wirehouse brokers shouldn't be surprised at increasingly "corporate branch managers," says David Zimmerman, who joined Dain Rauscher as Dallas branch manager after a long career as a wirehouse branch manager. "It has to be a black box approach at wirehouses now because of their increasing size." But branch managers lose control over what really works in their own branches. "At a regional, senior management still needs branch manager input on where the firm is headed," says Zimmerman. "You can still run your own ship."

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